Optical/IP Networks

AlcaLu Deal Makes Us 'More Complete' Than Ericsson, Says Nokia CTO

Nokia's planned takeover of Alcatel-Lucent will make it a "more complete player" than Ericsson from a products and technology perspective, according to Hossein Moiin, the Finnish vendor's chief technology officer.

Moiin told Light Reading he expects the combination of Nokia Corp. (NYSE: NOK)'s mobile broadband expertise with Alcatel-Lucent (NYSE: ALU)'s fixed-line capabilities to give the new-look player a major advantage over its Swedish rival.

Looking to create an equipment giant with the scale to challenge both Ericsson AB (Nasdaq: ERIC) and China's Huawei Technologies Co. Ltd. , Nokia unveiled details of a €15.6 billion (US$17.3 billion) takeover of Alcatel-Lucent back in April and is now in the process of finalizing that deal. (See Nokia Makes €15.6B Bid for Alcatel-Lucent, Nokia & Alcatel-Lucent: What's Going On? and Eurobites: 'NokaLu' Clears Another Hurdle.)

Analysts have suggested that Ericsson and Huawei could look to capitalize on the uncertainties arising from the deal, especially given the problems that Nokia and Alcatel-Lucent have previously encountered as a result of merger activity. (See Nokia + AlcaLu: What the Analysts Say.)

But Moiin has hit back at the critics, casting aspersions on Ericsson's expertise in the field of IP technology. "Their knowledge of IP was acquired way back with their acquisition of Redback, which has not worked that well, whereas Alcatel-Lucent's takeover of TiMetra has worked out quite well," he says.

Light Reading approached Ericsson for a response to Moiin's comments but had yet to hear back at the time this story was published.

The Swedish company agreed to pay about $2.1 billion for Redback Networks Inc. , a maker of carrier edge routers, back in 2006, after Alcatel-Lucent had sealed its deal for TiMetra -- another player in the IP edge routing market -- in 2003. (See IPTV Drives Ericsson to Redback and Alcatel & TiMetra Seal the Deal.)

IP routers and platforms now constitute a major part of Alcatel-Lucent's overall business and evidently proved to be a big attraction for Nokia, which is a weaker player in this particular market, acknowledges Moiin.

Of particular interest to the Nokia CTO is the Nuage Networks SDN business that Alcatel-Lucent owns. "It will help us to unify our approach towards virtualization and cloud management so that we can offer customers a uniform way of managing physical assets in a virtualized environment," he says. (See Will Nokia Appreciate AlcaLu's Nuage?)

Want to know more about the emerging SDN market? Check out our dedicated SDN content channel here on Light Reading.

Moiin is optimistic Nokia and Alcatel-Lucent will not run into the same problems that bedeviled earlier mergers, believing the rise of open-source practices will make the integration of different but overlapping product portfolios much easier.

"In the initial phases we would look to combine the best features of the two companies to create a single portfolio that is optimized," he says. "There are techniques available to us now that were not available when Nokia and Siemens combined or when Alcatel and Lucent did."

Even so, there is a risk that service providers are drawn to Ericsson and Huawei -- Nokia rivals that would also claim to have broad product portfolios -- out of concern about the instability resulting from Nokia's takeover of Alcatel-Lucent.

Moiin insists that most operators are not overly worried. "I believe most of our customers are satisfied that we'll provide the required stability in the process [of merging]," he says. "There may be some ups and downs but we'll have clear customer teams and a clear product portfolio from day one."

He also reckons Huawei will have a hard time confronting the enlarged Nokia because of the "challenges" it faces when courting business in certain markets.

"Telecom fundamentally is infrastructure comparable to energy and when you think about what it does for society as a whole you want to ensure it is immune from attacks and hacking," he says. "You want to trust the people that build the infrastructure on your behalf."

Huawei has been locked out of business opportunities in some Western markets -- including the US -- with authorities fretting about its close ties with the Chinese government.

In 2012, the US government published a report claiming the vendor posed a threat to national security. In retaliation, Huawei has described the opposition it faces as a form of protectionism.

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

Sarah Thomas 7/15/2015 | 11:31:57 AM
Re: This is a takeover, which is better! It all hangs in the integration and whether the merged company can take on Ericsson in professional services and systems integration.

Also, totally a missed "you complete me" opportunity.
Owner/Bl75374 7/15/2015 | 8:46:27 AM
This is a takeover, which is better! I agree with teh earlier comment that this is a takeover, not a merger. So Nokia can start making real changes and charge ahead with aunified vision. I see Nokia offering a complete solution for all of their customers. I would like to think they are a gamechanger. 

DS53 7/15/2015 | 3:48:06 AM
Not a Merger It should be pointed out that this is not a merger, but a pure buy of ALu, menaing no sharing of posts or vision; only driven by Nokia alone.
Mitch Wagner 7/14/2015 | 1:35:09 PM
Intriguing I'm intrigued by the observation that open source teaches collaboration skills useful in a merger situation. Makes sense -- open source requires collaboration outside organizational lines, and that will be helpful in a newly merged company where two separate networking/IT organizations need to learn to cooperate quickly. 

I'm also intrigued to see a high-level Nokia exec single out Nuage as an asset. First time I've sen acknowledgment that Nuage is on Nokia's radar at all. 
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